Bamboozled: MoneyPak’s demise bad news for scammers

Somewhat quietly, Green Dot — the maker of the popular MoneyPak card — is pulling the cards from store shelves in favor of a different technology.

That’s a great thing for consumers.

MoneyPak cards were designed to help customers reload pre-paid debit cards with cash, to add cash to PayPal accounts and to make payments to approved businesses.

But ne’er-do-wells have used the cards to steal money from unsuspecting victims. The bad guys manipulate and trick people into handing over card numbers and PINs, which is all the crooks need to pull cash from MoneyPak cards.

And the thefts are almost impossible to trace.

Indeed, Bamboozled’s mailbag has been filled with scam reports from readers all over the country — about a dozen complaints a week since we first wrote about MoneyPak — and all the readers said hucksters stole their money via MoneyPak cards.

Law enforcement agencies across New Jersey — and all over the country — have been issuing warnings to possible victims. And the FBI has issued multiple alerts about fraud with these cards, and the Consumer Financial Protection Bureau has said it’s looking into these complaints.

Some of the readers who contacted us said they were supposed to buy a car, and the seller requested payment via MoneyPak, but then stole the funds without delivering the car. Others reported they were threatened with arrest or deportation if they didn’t pay fines with a MoneyPak card.

And there are other cases, right here in New Jersey.

In May, someone impersonated a Morris County sheriff and told potential victims they were the subject of a bench warrant because they failed to appear for jury duty. They’d have to pay bail, which could be done over the phone with MoneyPak, the caller would say.

And just earlier this month, Lebanon Township police said it received multiple complaints that a caller with a foreign accent phoned residents, saying he was an IRS agent and that the resident owed back taxes. The caller would then tell his marks to purchase MoneyPak cards to pay the debt. When the caller would contact them a second time, the would-be victims gave their card numbers and PINs to the caller, and the caller would quickly wipe the cards clean of cash.

South Brunswick Police Chief Raymond Hayducka said he’s seen many varieties on the scam.

“The biggest one is that they say they’re a bail bondsman and your son or grandson is in trouble, and they need money immediately,” he said. “Or they’re going to turn your electric off. I’ve even seen it on an online dating site where they con people into giving them money.”

Hayducka said he was once targeted, receiving a call from a scammer who tried to tell him he owed money and without immediate payment, he’d face criminal charges.

Alas, the call didn’t last very long once the Hayducka told the scammer what he did for a living.
THE CHANGES

Green Dot has been well aware of how frequently scammers use its products, and it has been trying to educate consumers and halt con artists, to no avail — as the Bamboozled mailbag can attest.

In July, Green Dot testified about the scams before the U.S. Senate Committee on Aging, saying it has been unable to completely fight the fraud because victims are the ones giving out their PIN numbers.

So the company is sort of giving up the fight. It said it has decided

to discontinue MoneyPak altogether in favor of different technology.

“Green Dot is in the process of phasing out the PIN-based MoneyPak reload method in favor of its new ‘Reload @ the Register’ swipe to reload technology, where customers can simply swipe their prepaid debit cards at the register to load cash and not have to take the extra step of buying a MoneyPak,” a company spokesman said. “This will also eliminate the ability for scammers to use the MoneyPak service for wrongdoing.”

Green Dot said MoneyPak PIN cards have already been pulled from Walmart stores, and will be completely unavailable at all retailers by the end of the first quarter of 2015.

Interestingly, when the company made the announcement about the swipe technology in a March 31 press release, no one really picked up on it.

Maybe that’s because the press release didn’t even mention MoneyPak or the scams, which seem to be the real reason for this new product.

We asked GreenDot for data on how many complaints it has received from customers, but the spokesman said, “I do not have data on that.”
HOW TO PROTECT YOURSELF

To its credit, Green Dot has always given consumers good advice on how to keep their cards — and the money on them — safe. MoneyPak cards are sold with packaging that highlights safe practices in red, and the web site offers links with information on common scams.

Green Dot recommends consumers treat MoneyPaks the same as cash, and that they never give card numbers or PINs to a private individual.

More and more, pre-paid debit cards have become a go-to payment method for swindlers who seek to obtain money from victims, said Steve Lee, acting director of the Division of Consumer Affairs.

“Consumers should follow this basic rule of thumb: Any time any person or entity asks you to pay them by purchasing a pre-paid debit card, you should hear alarm bells and assume you’re being scammed,” he said. “Debit cards are not illegal or inherently criminal. They have their legitimate uses.”

Lee said basic awareness is the best protection for consumers. Never act on a request for money without first verifying that the person, entity and situation in question are legitimate, he said.

For example, if you are contacted by someone purporting to be from the IRS or a trusted business, you should find a separate way to contact that entity and ask whether the communication you received is genuine, Lee said.

Hayducka, the police chief, said if you get a call asking for payment, hang up and report it to your local police department. Also know it’s a red flag if the call comes from out of the country.

If you think a call asking you for money may be valid, tell the caller to send the payment request to you in writing, but don’t give out your address, he said. If it’s legit, the caller will already have your address.

“But clearly if they want a MoneyPak, it’s a scam,” Hayducka said.

If you do fall victim to a MoneyPak scam, Green Dot wants to hear from you at 1-800-GREENDOT (1-800-473-3636). The company said if you report a

problem, it will see if it can “recover any funds that have not already been removed by a scammer and continue working with law enforcement to identify the origin of these activities and end these abuses.”

But it seems the end of MoneyPak will ensure that, at least by the middle of 2015.

Have you been Bamboozled? Contact Karin Price Mueller at Bamboozled@NJAdvanceMedia.com